Articles

Main Street vs. Mergers & Acquisitions

“Main Street” businesses and Merger & Acquisition transactions are handled very differently when it comes time to sell, and we at Murphy Business can handle both! Here’s how they are different:
MAIN STREET BUSINESSES: Main Street businesses come in many shapes and sizes. Often they are a “mom and pop” business with a handful of employees, they are owner-operated, have an EBITDA (earnings before interest, taxes, depreciation, and amortization) of less than $1 million, and the business provides a comfortable living for the owners. Values are based on a multiple of Seller Discretionary Earnings (SDE) and, when priced and marketed correctly, these businesses usually take a few months to sell. There are many factors that determine what multiple will be used, including comparable sales. We market them primarily online, and blindly, to a national audience – believe us, you do NOT want your customers to know you’re trying to sell. Prospective buyers of main street businesses are acquiring something either to run themselves or to bolt on to an existing operation. Murphy Business has a website dedicated to Main Street businesses; you can learn more here.
MERGERS AND ACQUISITIONS: Our office is also certified to handle Merger & Acquisition transactions (that’s the CMAI in Jennifer’s alphabet soup…a Certified Merger & Acquisitions Intermediary.) These transactions are handled very differently from main street businesses. These are typically more complicated structures because of the number of locations, business lines, management structures, or a combination of factors. EBITDA is between $3 million and $500 million and the owners often do not work in the business. Middle market businesses require a vastly different approach to selling, marketing, and transitioning ownership. They are marketed to strategic buyers and other funding groups in a very targeted way and they require an extraordinary amount of research to prepare them for presentation. Buyers are thoroughly vetted before any offers are accepted. There is a substantial investment on both sides in accounting support and legal counsel and the business broker(s) involved must be equipped to handle the complicated nature of the deal. Again, Murphy Business has a website dedicated to Merger & Acquisition transactions and you can learn more here.
If you’re not sure which category your business belongs to (or perhaps your business falls somewhere in the middle), contact us and we’ll help you figure it out. Rest assured that we are certified and capable of handling transactions from $100,000 - $500 million and we look forward to talking with you!